Evidence of meeting #207 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was money.
A video is available from Parliament.
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
Would that be a fair way of...?
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
I would prefer if you answered with a scenario, if it's possible to do that.
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
I'm just concerned that I didn't fully understand all of the subtlety of the scenario.
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
I'll just briefly walk through the formula, which is, as I said, a touch complicated.
C is the amount estimated to be collected from the fuel charge. D is the amount estimated to be paid to individuals, and potentially others, under the Income Tax Act. You're basically making sure that any payments are taken into account before the maximum is set. When you get to B—and there are four components of B—that's looking at previous periods that have occurred to make sure there's a true-up in that period for previous periods.
That's why you're looking at, again, the amounts that have been collected from the fuel charge in E—the amounts that have been paid out to individuals and potentially others in relation to the rebates. Then, looking at the actual payments that have been made, which is G, pursuant to this authority, and then finally there is a true-up in relation to a lag effect related to entities' relationship with the Canada Revenue Agency. That is the purpose of H.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Let's go back to the algebra example.
Am I correct, then, to assume that if the Minister of Finance, under subclause 129(5), which is G, creates conditions under which two other ministers, or another minister, can take money out for a program or for infrastructure spending, it would deduct from the total that could be redistributed, under H and other provisions, to residents of a province?
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
That's correct.
Liberal
The Chair Liberal Wayne Easter
Is there any further discussion in this area? Are there any other questions on climate action support?
Mr. Dusseault.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
I'll be quick, because I know we need to move on.
Did you calculate the cost to business, in general, and small and medium-sized enterprises, specifically?
Obviously, we are talking about amounts that taxpayers in the four specified provinces can claim as a credit on their tax return, further to the incentive measure whose name I can't quite recall.
Can small and medium-sized enterprises expect similar support measures for business, in other words, under the Income Tax Act? Or will that support be included in the payments to the provinces?
Director General, Environmental Protection Branch, Department of the Environment
Thank you for the question.
Given the context, I'm going to switch languages to answer.
The commitment in terms of the return of proceeds, as was announced publicly in the fall, is that 90% of the proceeds from the fuel charge in those specified jurisdictions of Manitoba, Saskatchewan, New Brunswick and Ontario go back to households. They're climate action incentive payments.
It was also signalled that about 10% of those direct proceeds from the fuel charge would be returned to other affected sectors, and that included small and medium-sized enterprises. It included what we call the MUSH sector—municipalities, universities, schools and hospitals—and indigenous organizations and the non-profit sector, etc.
At that time, when that was indicated on October 23, Finance Canada—and I'll defer to them for the details—published the estimated proceeds and the return that would go back to those sectors. There are estimates by jurisdiction and by year in the public domain, and we can certainly forward you the links if that would be helpful.
The details of the direct proceeds that are returned, that approximate 10% to those other affected sectors, are still being developed, so we don't have specific details on that at this time.
That's sort of the overall scenario, but the numbers in terms of estimated amounts going to small and medium-sized enterprises are available in the public domain.
Jesse Fleming Executive Director, Implementation, Department of the Environment
Furthermore, according to the October 2018 announcement, approximately two-thirds of the 10% of proceeds flowing from the program will go to small and medium-sized enterprises, with about a third going to the other affected sectors. Those are the approximate figures, according to the announcement.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
That 10% of proceeds will be returned via the transfer payments to the provinces. Is that correct?
Director General, Environmental Protection Branch, Department of the Environment
That's correct.
Liberal
Conservative
Pierre Poilievre Conservative Carleton, ON
Yes.
On the disbursement of these funds to organizations and individuals affected by the carbon tax, on that subject, is there any guarantee that small businesses will get as much back in benefits from these expenditures as they pay in higher prices through the carbon tax?
Director General, Environmental Protection Branch, Department of the Environment
The details of how that 10% will be disbursed, including to small and medium-sized enterprises, are still to be determined. Just in terms of the expectation of how the approach works, there would be two things, I would say, with respect to small and medium-sized enterprises.
One is the expectation that many—if not most—would pass any additional cost incurred through to the consumer, hence the rationale for returning the significant portion of the direct proceeds to households, which will for the most part get back more than the costs they incur, but the other thing that is available to small and medium-sized enterprises is also the potential ability to opt into the output-based pricing system, if it makes sense for them from a cost-benefit analysis on their part.
Conservative
Pierre Poilievre Conservative Carleton, ON
On this 10% fund that will emanate from the carbon tax, is there any guarantee that this money will be used to compensate small businesses for the real costs that they must incur and can't pass along to their customers? Is there any guarantee in the law?
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
I think the short answer is that the details of how these provisions, if passed by Parliament, will be used in relation to small and medium-sized enterprises and other particularly affected sectors are still under development and really can only be released once the statutory provisions to enable the payments are enacted.
Director General, Corporate Finance, Natural Resources and Environment, Economic Development and Corporate Finance, Department of Finance
So as not to prejudge that the authorities will be available to the government.
Conservative
Pierre Poilievre Conservative Carleton, ON
But details are regularly introduced in budget books, for example, before legislation is passed, so why can't the details be known before this legislation is passed?
Liberal
The Chair Liberal Wayne Easter
The officials are not in a position to answer that, Mr. Poilievre. It's only the minister who can.